I remember playing Warcraft 3 but I do not remember a scene with Arthas' death. In contrast the lore tells us that every Death Knight died before they become what they are. So did Arthas die before he became one?

5 Answers
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First generation (or DK of Old Horde) were made by Gul'dan of slain warlocks of Shadow Council. Souls were merged by fallen warriors of Stormwind. This DK were more like necromancers - spellcasters. The most known DK of first generation is Teron Gorefiend.

The second generation of DKs from Lich King itself. Arthas was the first DK of the second generation. Difference between first and second generation is that Lich King's DKs were brute warriors and not so much spellcasters. The key to become DK was to give your free will (soul) and not your life. In War 3 expansion, after Frozen Throne was damaged and Lich King was losing his power, Arthas was gaining back his human nature.

We also have a little plot hole about Frostmourne. The lore says that anyone who is killed by the sword, his soul will be trapped inside, yet Lady Sylvanas Windrunner, after she was raised from the dead, managed to get both her soul and free will back.

The best evidence that you don't have to die to become DK is in third generation of DK or Ebony DK. These DKs are playable and when you select any living race to be DK you get their attributes and abilities. If you create a human DK you'll get human abilities and not undead ones.

There is a quest added in WoW in Wrath of the Lich King which, among others, in fact do show Arthas was a living death knight. In short, during the battle against Illidan he realized his own hearth is his greatest weakness (he was bleeding after the duel), so he rips it off his chest and throws it in Naz'anak - The Forgotten Depths below Icecrown Citadel.
In the quest when player finds out the hearth, it's still pulsing, so, we could conclude that it also was pulsing when it was in Arthas chest (and along with bleeding), I would say this is a strong evidence Arthas was in fact alive when he turned into Death Knight.

However, I'm not anymore so sure about third generation of DKs are they living or undead.
In the very intro of the class, it is said player did lose his life. In fact, some people on offical forums and fan site are stating these DKs are brought back to life (reanimated). Also, the most of the RP players in WoW consider DK as undead. However, there are also in-game material which are stating otherwise. For example, flavor text in the DK talent Lichborn says - "Draw upon unholy energy to BECOME undead for 10 sec."
So all in all, if we are take everything into account - lore, cinematics, gameplay, apperance, mehanics we could say that they aren't either alive nor undead, but something in-between (and have the ability to step from one side to another).

As far as I can remember, there is no specific scene shown, in where he dies. It seems that he more and more turns into a Death Knight, maybe in this transformation, death has occured somewhere, but without any noticeable changes or events.

With a great cry of strength, Arthas brought Frostmourne to bear against the Lich King's icy prison and with a haunting scream, the Frozen Throne exploded, and shards of the crystal scattered on the ground. With Ner’zhul’s thorny helm at his feet, Arthas leaned forward, picked it up, and placed the unimaginably powerful artifact on his head.

"Now," Ner'zhul's voice echoed within his mind, "we are one!"

In that moment, Ner'zhul and Arthas' spirits fused into a single mighty being, just as the Lich King had always planned. Arthas as a single being ceased to exist, now one half of one of the most powerful entities Azeroth had ever known, the new Lich King.

So one could argue that when the spirits fused that the old Arthas died. But it's a special case in my opinion since he merges with the Lich King and is no ordinary death knight.

Q: How will the death knights fit into the Alliance, when they were primarily horde.

A: Still deliberating. Warcraft II death knights were on the Horde side. In Warcraft III, it was a number of paladins who succumbed to despair and fear. Arthas never died. Are death knights really dead and do their powers reflect Warcraft III? How can they be let into the factions?

Remember the end of the human campaign when Arthas is mentioned to have wandered into the desolate wastes of northrend. In this he loses his sanity and all of his free will as he is now enslaved by the Lich KIng.

Arthas was the last of the undead champions to be created as after all you saw that most of the undead units have been stolen from orc and human units .

His manifestation a death knight on his shadowy steed is believed to be his own favourite horse whom was killed in battle. He has the ability to raise dead so lets presume he did it. But his sudden teleportation in front of Tichondrious at the beginning of the undead campaign suggests that he was summoned by TIchondrious to receive instructions on his first missions.

TIchondrious was carrying out archimonde's will through arthas by ensuring that Kelthuzad is ressurected to begin the summoning as he is the only undead sorcerer powerful enough to understand Medivh's spellbook.... But I hate tichondrious for leaving arthas to fend for himself in the last undead mission because his help would have been much appreciated in fending of the wizards. Ha in the end arthas kills tichondrious through Illidan to set the stage nicely for TFT

Maybe you missed the fine point when tichondrious explains to arthas "how Froustmourne devoured his soul making him a slave of the LIch king ". ..... yes.. that shold wrap this answer up